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Maharashtra government forms 2 panels to keep an eye on cooperatives

LiveMint 11-09-2017Abhiram Ghadyalpatil

Mumbai: As part of its reform agenda for Maharashtra’s once vibrant cooperative sector, the Devendra Fadnavis government has formed two committees to study the working of some prominent cooperative institutions and suggest measures to improve them. A government resolution announcing the appointment of the two committees was issued on Monday.

According to the resolution, a four-member committee of experts under Anand Jogdand, director, Maharashtra directorate of co-operation in Pune, will study the working of cooperatives in agriculture, agriculture marketing, and district cooperative banks. The other four-member committee under Chandrakant Kardak, managing director, Consumer Federation, will look at the functioning of cooperatives in the consumer sector like the cooperative housing societies. Both committees have to submit their reports within 60 days.

“The government has noticed that some cooperative institutions have violated the provisions under Maharashtra Co-operative Societies Act and its by-laws as well as the policy guidelines issued by the government. As a result, a large number of cooperatives are in deep financial problems which are affecting their day-to-day functioning,” the government resolution says.

A senior cooperation department official who is associated with the decision and who did not want to be identified said it was “long overdue”.

“The once thriving cooperative sector in Maharashtra has earned notoriety for corruption as well as political control and exploitation of the economic resources of the cooperative units. Many cooperative units, especially the sugar factories, district banks, and urban and rural credit societies in both agriculture and non-agriculture sectors have allowed themselves to be looted by their directors and influential members who have local political clout. Both the Reserve Bank of India and the National Bank for Agriculture and Rural Development (Nabard) have pointed out these problems from time to time but not many corrective measures have been taken so far,” the cooperation department official said.

Maharashtra tops India’s states in terms of the number and penetration of cooperative institutions. The state has around 200,000 cooperative units with an aggregate membership of more than 50.5 million. Some of the prominent cooperatives are 31 district cooperative banks with over 21,000 primary agriculture credit societies which cater directly to farmers, cooperative sugar factories which buy sugar cane directly from the member-farmers, cooperative textile mills and power looms, agriculture marketing and processing units, urban and rural non-agriculture credit societies, and milk cooperatives. The working of all cooperative units in the state is governed by the Maharashtra Co-operative Societies Act of 1960 and guidelines from Nabard.

Both committees have been given broad terms of reference to allow them to suggest drastic corrective measures, according to the official quoted above. The committees have been asked to find out if the cooperatives have achieved the purposes for which they were set up; what measures the cooperatives have taken at their level to sort out the problems they faced in implementing their mandate; the utilization and recovery of loans issued or guaranteed by the government; jobs created by the cooperatives; measures taken to investigate financial irregularities; and measures taken to revive those cooperative units that have gone into liquidation. “The committees have to refer these leading points for their study and suggest measures as well as policy decisions that the state government can take to improve the functioning of the cooperatives,” said the official.

Since coming to power in October 2014, the Bharatiya Janata Party (BJP)-led government in Maharashtra has initiated measures including key amendments to the laws with the stated aim of reforming the sector long dominated by the Congress and later the Nationalist Congress Party (NCP). Predictably, the Congress and NCP have contested some of these measures claiming that the BJP was trying to make a back door entry into the cooperative sector.